When Cyclical Stocks Turn: Robert Half's 26% Surge Reveals Economic Inflection Point

The stock market had plenty to celebrate when Robert Half International (NYSE: RHI) spiked 26% during a single trading session. But beneath this dramatic price movement lies a more significant story about cyclical stocks and what their recovery patterns mean for the broader economy.

Recruitment firms sit at a unique vantage point in the economic cycle. As companies become more cautious during downturns, hiring slows dramatically. But when confidence returns, recruitment becomes one of the first bellwethers to signal that a turnaround is underway. In Robert Half’s case, that turnaround appears to be arriving.

The Recruitment Market Rebounds: What the Latest Earnings Reveal

After enduring several challenging years, Robert Half’s fourth-quarter earnings delivered an unmistakable signal. CEO Keith Waddell highlighted a critical development: “We are very pleased to see talent solutions and enterprise revenues return to positive sequential growth on a same-day constant currency basis for the first time in over three years.”

This wasn’t merely a statistical blip. Waddell emphasized that positive momentum carried through the early weeks of January, and the company beat guidance on both earnings and revenue. For cyclical stocks like Robert Half, these sequential improvements matter far more than year-over-year comparisons, which remained negative. Sequential growth signals that the worst has passed and a new phase is beginning.

The significance extends beyond Robert Half alone. A healthier recruitment market indicates companies are gaining confidence to expand their workforce—something that typically only happens when economic conditions stabilize. Small and medium-sized businesses, in particular, appear to be hiring again, a trend that could reshape growth prospects for multiple sectors throughout 2025.

The Question of Timing: When Will Cyclical Stocks Fully Recover?

Investors in cyclical stocks hunt for inflection points, but they also understand that patience is required. Waddell cautioned that based on current trends, the company wouldn’t return to year-over-year growth until the third quarter of 2025. Full recovery won’t arrive overnight.

However, that timeline matters less than the directional shift. If subsequent quarterly reports confirm the momentum gathering in early 2026, cyclical stocks trading on similar economic sensitivities could appreciate substantially. The earnings reports due through the first half of the year will be essential to watch. Should they validate the positive trend, investors might see a significant rally in sectors tied to economic activity.

What makes this development particularly noteworthy is its macroeconomic implication. A genuine recovery in recruitment demand signals that corporate America believes the economic outlook has shifted favorably. For investors tracking economic indicators, cyclical stocks serve as an early warning system—sometimes confirming the good news before traditional metrics catch up.

Evaluating the Investment Case: What Comes Next

Before committing capital to cyclical stocks at this stage, investors should consider the full picture. The Motley Fool Stock Advisor team identifies what they believe are the 10 strongest investment opportunities available today, and Robert Half didn’t make that particular list. This serves as a reminder that even during cyclical recoveries, selectivity matters.

That said, history suggests investors who recognized inflection points early captured substantial gains. Consider that Netflix appeared on Stock Advisor’s 10-stock list on December 17, 2004—an investment of $1,000 at that recommendation would have grown to approximately $448,476 by January 2026. Similarly, Nvidia made the list on April 15, 2005, turning a $1,000 investment into roughly $1,180,126 by the same date.

The broader point: cyclical stocks recovering from severe downturns can deliver outsized returns if timing aligns with a genuine economic recovery. Stock Advisor’s track record—averaging 945% in total returns compared to the S&P 500’s 197%—illustrates how identifying turning points in cyclical stocks can compound wealth over time.

For investors seeking exposure to cyclical opportunities, the focus should remain on confirming that the current momentum represents a genuine, sustained recovery rather than a temporary bounce. The data arriving through mid-2025 will prove decisive in that regard.